Home Depot 2008 Annual Report Download - page 7

Download and view the complete annual report

Please find page 7 of the 2008 Home Depot annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 66

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66

Our Business
Operating Strategy. In fiscal 2008, despite the continuing difficult economic environment, we continued to focus on our
core retail business, investing in our associates and stores and improving our customer service. We shifted our focus from
new square footage growth to maximizing the productivity of our existing store base. During the year, we implemented
significant changes in our store operations to make them simpler, more consistent and more customer-focused. We shifted
associate hours to be more customer facing and refocused our efforts on offering every day values in the stores.
Additionally, we made several strategic decisions which are intended to optimize our capital allocation, concentrate our
efforts on our core business and create long-term value for our shareholders, including our decision to close 15 stores,
remove approximately 50 stores from our new store pipeline and exit our EXPO, THD Design Center, Yardbirds and HD
Bath businesses.
Customers. The Home Depot stores serve three primary customer groups:
•Do-It-Yourself (“D-I-Y”) Customers: These customers are typically home owners who purchase products
and complete their own projects and installations.
•Do-It-For-Me (“D-I-F-M”) Customers: These customers are typically home owners who purchase
materials themselves and hire third parties to complete the project or installation, or both. We arrange for the
installation of a variety of The Home Depot products through qualified independent contractors.
•Professional Customers: These customers are professional remodelers, general contractors, repairmen, small
business owners and tradesmen. In many stores, we offer a variety of programs to these customers, including
delivery and will-call services, dedicated staff, extensive merchandise selections and expanded credit
programs, all of which we believe increase sales to these customers.
Products. A typical Home Depot store stocks approximately 30,000 to 40,000 products during the year, including both
national brand name and proprietary items. The following table shows the percentage of Net Sales of each major product
group (and related services) for each of the last three fiscal years:
Product Group February 1,
2009 February 3,
2008 January 28,
2007
Percentage of Net Sales for
Fiscal Year Ended
Plumbing, electrical and kitchen 30.6% 31.0% 30.8%
Hardware and seasonal 28.7 28.0 27.0
Building materials, lumber and millwork 22.1 22.3 23.6
Paint and flooring 18.6 18.7 18.6
Total 100.0% 100.0% 100.0%
In fiscal 2008, we reduced our inventory while maintaining a favorable in-stock rate. We also reduced a number of one-
time discount promotions and refocused our efforts on offering every day values. We continued to introduce innovative
and distinctive products to our customers, including Thomasville»deep seating patio furniture, Charbroil»infrared grills,
RIDGID»pressure washers and Homelite»trimmers.
To complement and enhance our product selection, we have formed strategic alliances and exclusive relationships with
selected suppliers to market products under a variety of well-recognized brand names. During fiscal 2008, we offered a
number of proprietary and exclusive brands across a wide range of departments including, but not limited to, Behr
Premium Plus»paint, Hampton Bay»lighting, Vigoro»lawn care products, Husky»hand tools, RIDGID»and Ryobi»
power tools, Pegasus»faucets, and Glacier Bay»bath fixtures. We may consider additional strategic alliances and
relationships with other suppliers and will continue to assess opportunities to expand the range of products available under
brand names that are exclusive to The Home Depot.
From our Store Support Center we maintain a global sourcing merchandise program to source high-quality products
directly from manufacturers around the world. Our Product Development Merchants identify and purchase market leading
innovative products directly for our stores. Additionally, we have three sourcing offices located in the Chinese cities of
Shanghai, Shenzhen and Dalian, and offices in Gurgaon, India; Milan, Italy; Monterrey, Mexico and Toronto, Canada.
2